Islamabad's Cabinet Committee on Energy (CCoE) approved the project, allowing work to begin from the Iranian border to the strategic port area of Gwadar in southwestern Balochistan Province at an estimated cost of $158 million in a last-ditch effort to ward off $18 billion in potential penalties from Iran, The Cradle reported.

“CCoE approved the recommendations of the Ministerial Oversight Committee for the IP project constituted by the prime minister in September 2023 whereby the committee recommended to start work on the 80-kilometer segment of the pipeline inside Pakistan, i.e., from Pakistan border up till Gwadar in the first phase,” reads an official statement issued by the Ministry of Energy.

“All the concerned divisions gave a positive nod to move ahead with the project to ensure gas supplies to the people of Pakistan, thereby addressing the increasing energy needs of the country,” the statement adds.

Pakistan’s Interstate Gas Systems (Pvt) Ltd will execute the project, which is set to be funded through the Gas Infrastructure Development Cess (GIDC).

The 2,775-kilometer-long IP project was launched in 2013. However, it missed several deadlines due to long-standing US sanctions against Tehran.

In September 2023, a senior Pakistani Petroleum Ministry official told a Senate committee that Islamabad was negotiating with Tehran to escape a potential penalty of $18 billion in liabilities as the long-stalled project's deadline approaches in 2024.

Islamabad also approached Washington last year, asking for a solution, but received no response.

Iran says it has already completed its side of the pipeline and has invested $2 billion in the project. Pakistan was initially expected to complete its part of the project by December 2014.

In March 2013, former Pakistani president Asif Ali Zardari and his Iranian counterpart Mahmoud Ahmadinejad held a groundbreaking ceremony near Iran's port city of Chabahar, with an estimated cost of $7.5 billion at that time.

Due to Pakistan's dire economic crisis, the nation faces regular blackouts lasting 12 hours per day, if not longer.